GCC counties account for 90pc capital in Mena IPO

London, August 20, 2014

GCC countries had the largest share of initial public offering (IPO) listings in Mena, accounting for 90 per cent of the capital raised through IPOs in Mena in the first half of the year, with 10 IPOs raising nearly $2.1 billion.

The GCC countries listings constituted nearly 78 per cent of capital raised from 64 IPOs between 2009 and 2014, a report said.

The recovery from the economic crisis in 2008 can be attributed to MSCI upgrading Qatar and the UAE to emerging markets from frontier markets, which sustained investment in developing social infrastructure and capacity building to host upcoming global events such as FIFA 2022 in Qatar and Expo 2020 in Dubai, it said.

As the global economy recovered, the Qatar and Abu Dhabi stock exchanges surged nearly 50 per cent year-on-year by the end of May 2014. The Dubai financial market general index rose 110 per cent until May 2014 from that in the previous comparative period.

Increased foreign ownership limit, especially in the Qatari market that raised foreign investment limits to 49 per cent from 25 per cent in May 2014, is expected to improve the flow of foreign funds into regional equity markets. This would also set IPO markets in momentum, the report said.

The likely opening of the Saudi Arabian stock market – the largest equity market with a market capitalisation of around $560 billion as of July 2014 in Mena – to foreign investors would bode well for Mena markets, it said.

Saudi Arabia is the prime issuer in terms of number of issues and capital raised in the Mena IPO market. The country accounted for nearly 38.5 per cent of total proceeds raised from 41 IPOs between 2009 and 2014.

Saudi Arabia led the GCC activity in the first half of the year with four IPOs, followed by the UAE with three and Qatar with one, stated the report.

The largest deal in H1 was by Mesaieed Petrochemical Holding Company, a subsidiary of Qatar Petrochemical, which garnered $905.3 million, accounting for about 40 per cent of total capital raised, it said.

In terms of capital raised, industrials (includes petrochemical companies) and IT & telecom led the IPO activity, raising over 50 per cent of total capital.

The financial services sector saw the highest number of IPO listings, accounting for around one-third of total listings since 2009, the report stated. – TradeArabia News Service